Vehicle Repossession: Can Filing For Bankruptcy Help Me Keep My Car?
Unlike many personal loans, a car loan requires collateral. The reason for this is that a car loan is a secured loan. Secured loans require some type of collateral as a condition of borrowing. In the case of a car loan, the collateral is the car that the loan is taken to purchase. Therefore, this means that if a borrower fails to make the agreed-upon car loan repayments, then the vehicle used for the loan may be repossessed by the lender.
If you took out a car loan and you are currently struggling financially, then you might be worried about your vehicle being repossessed. Losing your vehicle to repossession is the last thing you want, especially if you depend on it daily to get to work and other important places. Fortunately, filing for bankruptcy can prevent your car from being repossessed.
The following is a more in-depth look at how bankruptcy can help you keep your vehicle.
How Can Bankruptcy Help You Keep Your Car?
If you have an outstanding car loan and are struggling financially, filing for bankruptcy can help you keep your car. If you already know about Chapter 7 bankruptcy, then you may be wondering how you can keep your vehicle after filing a Chapter 7 bankruptcy. Well, a car is usually only subject to liquidation if you own it free and clear of any liens and if there is significant non-exempt equity to make it worth the Trustee’s time to sell as part of the bankruptcy estate.
If you file a Chapter 7 bankruptcy in Pennsylvania, you could eliminate a huge part of your debts, especially if they are all unsecured debts. These are debts without any collateral promised to the lender. Utility bills, medical bills, and credit cards are examples of unsecured debts. If, for example, you eliminate your credit card debt and medical bills debts, it means that you will stop paying those particular debts and will have money that you can use to pay off your car loan.
If you do not qualify for a Chapter 7 bankruptcy case, then0 you could decide to file a Chapter 13 bankruptcy. This type of bankruptcy can also help you keep your car. Chapter 13 bankruptcy will allow you to develop a payment plan that will enable you to pay off your car loan over some years, usually three to five. If you have purchased your vehicle more than 910 days ago, then you may be able to cram down your vehicle loan to the fair market value under Kelly Blue Book or NADA value if the loan is in excess of the value of your vehicle. If you choose to file a Chapter 13 bankruptcy, your lender will have no choice but to allow you to pay back the car loan as per the payment plan.
What if My Car Has Already Been Repossessed?
If your vehicle has already been repossessed by the lender, do not feel hopeless. Once a car is repossessed, the lender schedules a sale to recover their money. If you file for bankruptcy before the lender sells your car, then you may be able to recover it. However, you should note that you may still need to pay your remaining loan balance and any additional charges, such as repossession and storage charges, if you want to keep your car.
Contact a Pennsylvania Bankruptcy Attorney for Legal Help
Are you worried that you are about to default on your car loan? Have you already defaulted on your car loan? Are you concerned about losing your car? Contact the experienced Lehighton & Carbon County bankruptcy attorneys at Adam R. Weaver, Esq. today to discuss your options.